Schmid v. Auto. Underwriters, Inc.

• Court: Iowa Supreme Court
• Writing for the Court: KINDIG
• Citation: Schmid v. Auto. Underwriters, Inc., 215 Iowa 170, 244 N.W. 729 (Iowa 1932)
• Decision Date: 25 October 1932
• Docket Number: No. 41339.,41339.
• Parties: SCHMID v. AUTOMOBILE UNDERWRITERS, INC.

215 Iowa 170

244 N.W. 729

SCHMID

v.AUTOMOBILE UNDERWRITERS, INC.

No. 41339.

Supreme Court of Iowa.

Oct. 25, 1932.

Appeal from District Court, Polk County; Frank S. Shankland, Judge.

This was an action by the plaintiff as a judgment creditor of Arthur C. Peters, the assured, to recover the amount of the judgment from the defendant, as insurer. There was a trial to a jury resulting in a verdict for the plaintiff. From the judgment entered thereon, the defendant appeals.

Reversed.

Walter L. Stewart, of Des Moines, for appellant.

P. J. Gallagher, of Portland, Or., and James E. Goodwin, of Des Moines, for appellee.

KINDIG, J.

On March 15, 1926, the defendant-appellant, Automobile Underwriters, Incorporated, attorney in fact for the subscribers at the State Automobile Insurance Association, issued a policy of automobile indemnity insurance to Arthur C. Peters, 1444 West Pleasant street, Davenport, Iowa. Thereafter the insured, Arthur C. Peters, left the state of Iowa and went to the state of Oregon, where he continued to reside. While the insured Arthur C. Peters was driving his automobile, covered by the aforesaid policy, a collision occurred between that car and an automobile carrying Elizabeth Schmid, the plaintiff-appellee. As a result of that collision, the appellee was injured. She therefore commenced an action in a court of Oregon to recover damages against Arthur C. Peters, the insured. Accordingly, the appellee recovered damages from said insured in the Oregon court.

Subsequently, the appellee, on February 20, 1929, commenced the present proceedings in the court below against the appellant on the policy alleged to have been issued to Arthur C. Peters, the insured. The case was tried to a jury, which rendered a verdict for the appellee. Following that verdict, a judgment was entered against the appellant in the district court. From that judgment, the appellant appeals.

[1] I. It is argued by the appellant that the appellee is not entitled to recover, for the reason that the insurance policy had lapsed for nonpayment of premium.

Within the insurance contract is the following provision: “The total one year premium for this policy shown under ‘Representations of Assured’ is due the date the policy takes effect unless such due date is extended, either as to all or a part of said premium, by agreement stated in application of Assured or in writing signed by the Attorney; and the failure of the Assured to advance the premium or premiums on the due dates thereof, provided, however, that thirty days' notice of amount of premium and the date due shall have been mailed to Assured at his last known address or delivered to him personally, whether such notice comes from the Home Office of this Association or through its Agents, shall cause this policy to lapse for nonpayment of premium, and the Assured shall forfeit all his rights in the Association, including the claims for losses subsequently incurred by him; but any delinquent subscriber may be re-instated within such time and for such period and on such terms as may be agreed upon by the Attorney. This provision, however, for lapsing policy for non-payment of premium shall not be construed as a waiver of the right of the Association to cancel this policy at any time on five days' notice to Assured as hereinbefore provided.”

Arthur C. Peters, the assured, obtained the policy in question March 5, 1926. At that time the premium due was $16, but the assured only paid $5 thereon. A contention is made by the appellee that one Altfilsch, a soliciting agent of the insurer orally accepted from the insured a note for the balance due on the premium. This note, it is claimed, was due September 1 thereafter. By referring again to the policy, it will be recalled that the total premium was due March 5, 1926, “unless such due date is extended, either as to all or a part of said premium, by agreement stated in application of Assured or in writing signed by the Attorney.” No such agreement was stated in the application of the assured, nor was there any such agreement in writing signed by the attorney. According to the policy, then, the premium was due March 5, 1926.

For the purpose of avoiding that result, however, the appellee suggests that the insurer waived the terms of the policy in that regard when its agent, Mr. Altfilsch, accepted the assured's note for the balance of the premium. The insurer denies that any such note was ever accepted by Mr. Altfilsch, or the association. Mr. Altfilsch testified that he attempted from time to time to collect the balance due from the assured, Mr. Peters, but that Peters left Davenport, Iowa, where the policy was written, and went to the state of Oregon, where the accident occurred. Under these circumstances, it is contended by the insurer that it had a right to lapse the policy for nonpayment of the premium in accordance with the provisions of that contract, above quoted. Accordingly, the insurer insists that it did, in compliance with the policy, lapse the same for the nonpayment of the premiums. That was done, the insurer declares, by serving upon the assured a thirty-day notice “of amount of premium and the date due.” Such notice, the insurer asserts, was mailed to the last-known address of the assured. Manifestly, under the record, it is clear that the insured did thus lapse the policy for the nonpayment of the premium. It is clear, too, that the appellee is not entitled to recover on the theory that the insurer, by accepting the note, waived its right to lapse the policy. Waiver was not pleaded by the appellee, and therefore it cannot be relied upon. Brock v. Des Moines Insurance Company, 96 Iowa, 39, loc. cit. 45, 64 N. W. 685;McCoy v. Iowa State Insurance Co., 107 Iowa, 80, loc. cit. 83, 77 N. W. 529;Parsons v. Grand Lodge of United Workmen of Iowa, 108 Iowa, 6, loc. cit. 138, 78 N. W. 676;Smith v. American Insurance Company, 197 Iowa, 761, loc. cit. 767, 768, 198 N. W. 48;Burgess v. Stinson, 207 Iowa, 1, loc. cit. 3, 222 N. W. 362.

[2] In order to avoid this result, the appellee suggests that the lapsing of the policy was not in accordance with section 8959 of the Code. Said section is found in chapter 404, relating to insurance other than life. According to the section: “No policy or contract of insurance provided for in this chapter shall be forfeited or suspended for nonpayment of any premium, assessment or installment provided for in the policy, or in any note or contract for the payment thereof, unless within thirty days prior to, or on or after the maturity thereof, the company shall serve notice in writing upon the insured that such premium, assessment, or installment is due or to become due, stating the amount, and the amount necessary to pay the customary short rates, up to the time fixed in the notice when the insurance will be suspended, forfeited, or canceled, which shall not be less than thirty days after service of such notice, which may be made in person, or by mailing in a registered letter addressed to the insured at his post office as given in or upon the policy, and no suspension, forfeiture, or cancellation shall take effect until the time thus fixed and except as herein provided, anything in the policy, application or a separate agreement to the contrary notwithstanding.”

This statute, it is apparent, is not synonymous with the provision in the policy under which the appellant in the case at bar lapsed the assured's policy. For instance, under the statute the notice of forfeiture must state the amount necessary to pay the customary short rates. Also the notice, when mailed, must be addressed to the insured at his post office address given in or upon the policy. These statutory requirements were not complied with by the appellant in the case at bar because it neither gave the short rate, nor addressed the notice to the assured's address given in or upon the policy. Nevertheless, the notice actually given by the appellant to the assured in the case at bar complied with all the requirements in the policy. There can be no conflict, the appellee argues, between the policy and the statute,for the reason that the statute must prevail. As a general proposition that theory is correct. Here, however, there is involved reciprocal or interinsurance contracts, which, in many respects, are not controlled by the general law relating to insurance.

Section 9103 of the Code declares: “Except as provided in this chapter [408 relating to reciprocal or interinsurance contracts], the making of contracts as herein provided for and such other matters as are properly incident thereto, shall not be subject to the laws of this state relating to insurance, unless they are therein specifically mentioned.” (The italics are ours.)

Code, § 8959, above quoted, does not specifically mention reciprocal or interinsurance contracts. Hence the reciprocal or interinsurance contracts, because of section 9103, are not subject to the provisions contained in section 8959. Then the notice actually given by the appellant for the lapsing of the contract with the assured, being in full compliance with the contract, was sufficient to accomplish the lapse of the policy even though such notice does not comply with the requirements of section 8959. A lapse of the policy was accomplished because the notice fully complied with the contract. The district court, then, wrongfully submitted the cause to the jury on the theory that the policy had not been lapsed. Error appears at this juncture.

Other matters are argued which must be discussed because of the fact that there is to be a new trial. These propositions will now be considered under the following divisions.

[3][4] II. At the outset, it is argued by the appellant that this case is determined by Zieman v. United States Fidelity & Guaranty Company (Iowa) 238 N. W. 100, 105. There is a discussion in the Zieman Case concerning the distinction between an indemnity and a liability contract....